Sunday, September 2, 2012

Israeli Economy booming but All We're feeling is The Pain.

Last summer Israeli's took to the streets in unprecedented numbers to protest a variety of social economic issues that puts great pressure on those of us trying to make ends meet in Israel. What struck me as unique in these popular, peaceful, mass demonstrations was that the people marching were not, on the whole, the poorest members of society: This wasn't about extreme poverty, it wasn't about the geopolitical fringes of Israeli society (Arab sector, Haredim, or the economically deprived Negev & Galil regions). No. last summer was about the middle classes: Issues such as lack of affordable properties and impossibility of getting on the housing ladder, high prices of essentials in stores (where items cost up to 20% higher than similar items in similarly sized economies); prohibitive cost of early child care and other factors that affect then middle classes in Israel such as poor professional wages and high tax rates.

The events of last summer rocked the Netanyahu government and had major food companies like near monopolies Osem & Tnuva scrabbling to lower prices (for a few weeks) & justify their previous contempt for their customers. So here we are at the end of the Summer one year on, and things aren't better, they're worse: Petrol prices have reached record levels; over the weekend VAT rose 1%, hurting every single Israeli, the housing issue seems to have stagnated at the recognition of the problem stage, but without solutions, and the pre school education? Well ok, free ganim for over 3s is a start, but without putting money in to building new pre-schools, or hiring new staff, we are being asked to consign our kids to class sizes of around 40, with inadequate staffing levels. In any case, for the mothers with no choice but to go back to work after 3.5 months paid maternity leave have nearly 3 years years before they see any benefit.

By putting up VAT, and maintaining tax rates on oil imports (when world oil prices are very high), the government is being fiscally responsible, minimizing borrowing, and keeping inflation and exchange rates on an even keel, and I respect the need for them to do that. However, a strong economy that is built on the back of a population being squeezed to exhaustion, benefits nobody. I'm delighted the governor of the Bank of Israel believes the policies of the Finance Ministry are economically sound, and I would hate to see Israel go the way of Greece, Spain and other states in the Eurozone, but surely there needs to be some balance between needs of the economy and needs of the people?

It is impossible for a family to make ends meet in Israel unless both parents work two jobs, but then if you add children to the mix, most of the second wage will be taken up in child care; running a car is now so prohibitive, that many people are giving up cars, and all of us are walking more - good for the waistline, bad for the economy! We work longer weeks than our peers overseas, but get paid less than most countries in the developed world for doing the same job, however cost of living in Israel is not that much lower than in Europe or The US, in fact many basic items cost more in Israel, even though we earn less!

To add insult to injury, as we approach the most expensive time of year, with kids back in school, and the High Holy days around the corner, we get a serious increase in gas prices (which will have a knock on effect on food prices, as transport costs increase) and VAT has risen to 17%. It simply is not acceptable for the Israeli government shrug its shoulders and declare "ain mah laasot" (what can we do?) then to squeeze the public in this way.

By doing it in September, the government is cynically assuming that we are just too busy at this time of year to form mass protests, and they may be right, but something has to change in the root thinking of politicians and economists because people who are passionate about living and building this country, who have professional qualifications and on paper at least, good jobs, who work long hard days, with few public holidays and without normal weekends enjoyed worldwide, should not at the end of the month struggle to make ends meet. If thats the case, then I'm sorry, this is not a strong economy. A strong economy is not self serving, it benefits the people, and all we're feeling is the pain!

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